An All-Equity Firm Has a Return on Assets of 13

question 36

Multiple Choice

An all-equity firm has a return on assets of 13.3 percent.The firm is considering converting to a debt-equity ratio of .48.The pretax cost of debt is 8.6 percent.Ignoring taxes,what will the cost of equity be if the firm switches to the levered capital structure?

• A)16.01 percent
• B)15.28 percent
• C)16.60 percent
• D)17.03 percent
• E)15.56 percent

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An obligation often enforced by law, morality, or protocol, requiring individuals or entities to act or refrain from acting in certain ways.

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Citizens United

A landmark U.S. Supreme Court case that ruled the First Amendment prohibits government from restricting independent political expenditures by corporations and unions.